Occasionally, the investing lesson that shorting stocks is an immensely tough way to invest in the stock market is reinforced for me.
I published Why It’s So Difficult To Short Stocks and Shorting Stocks Is Hard, Really Hard in April 2020 and February 2024, respectively. In these articles, I shared how Luckin Coffee (OTC: LKNCY) and Herbalife (NYSE: HLF) made life treacherous for their short-sellers because their stock prices rose strongly in the interim before sinking. In particular, Luckin Coffee’s stock price rose even while management was committing fraud. I wrote in Why It’s So Difficult To Short Stocks:
“It turns out that fraudulent transactions at Luckin could have happened as early as April 2019. From 1 April 2019 to 31 January 2020, Luckin’s share price actually increased by 59%. At one point, it was even up by nearly 150%.
If you had shorted Luckin’s shares back in April 2019, you would have faced a massive loss – more than what you had put in – even if you had been right on Luckin committing fraud. This shows how tough it is to short stocks. Not only must your analysis on the fundamentals of the business be right, but your timing must also be right because you could easily lose more than you have if you’re shorting.”
I was reminded of Luckin Coffee by Intellego Technologies (SSE: INT). Based in Sweden, Intellego Technologies presumably offers dosimeters. When a surface requires disinfection with UV radiation, it is important to know if the surface has received the adequate dosage. This is where Intellego Technologies’ dosimeters are claimed to be able to help; they are devices that change colour after exposure to a certain amount of UV radiation.
Earlier this week, the company’s CEO was arrested on “suspicion of gross fraud”, and SEK 100 million of its cash reserves were seized by Swedish authorities. The trading of Intellego Technologies’ shares on the Swedish stock market was also suspended.
Although not much is known yet of the apparent misdeeds conducted by the CEO, the “gross fraud” is “related to [Intellego Technolgoies’] press releases and quarterly reports in 2025.”
Intellego Technologies held its IPO in June 2021. Its stock price closed at less than SEK 5 on the day of its listing. At the start of 2025, Intellego Technologies’ stock price was SEK 41. It climbed to SEK 78 at the end of June, before closing at a peak of SEK 213 in early September. Just prior to the trading suspension, Intellego Technologies’ stock price had fallen to SEK 47.
An investor back in June 2025 who thought the company had committed fraud and thus shorted its shares at the end of the month, had to endure a gain of nearly 200% in the stock price from SEK 78 to SEK 213 before the collapse to SEK 47 occurred. And this happened even when the investor is most likely right about Intellego Technologies being a fraud. This echoes what happened with Luckin Coffee in April 2019 to April 2020, and just reinforces the lesson for me on how incredibly tough shorting stocks is. Both your analysis on the fundamentals of a business and your timing must be right, because you could easily lose more than you have when you’re short selling.
Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. I currently have no vested interest in any company mentioned. Holdings are subject to change at any time.